Key considerations for developers creating mobile app EULA terms

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If you decide to launch a mobile app in 2016, one of the key legal protections you will need is an end user licence agreement (EULA). So, where do you start? I regularly review EULAs and I’ve noticed a number of issues that developers don’t always get right. Here is a list of the key issues you should consider.

1. One size doesn’t fit all

While platforms such as Google and Amazon each provide a “default” EULA, they also permit developers to adopt their own customised EULAs. Because the default EULAs can be quite limited and can’t possibly address all of the issues your app is likely to raise, it’s generally best to adopt your own.

2. How to ensure a binding EULA?

Whether a EULA is enforceable will depend on how it’s presented to users and how users indicate their agreement. In most app stores, a dedicated link called 'Licence Agreement' allows you to include a link to the EULA from your product page. In addition, you can include language in your apps’ 'Description' field making clear that, by downloading and using the app, users are accepting the EULA. If you want to ensure your EULA is enforceable, the safest approach is to include a link to the EULA and require an affirmative 'click-accept' when the app is first opened by a user to demonstrate that the EULA was accepted.

3. Who is bound by your EULA?

If an app is targeted toward businesses, the EULA should bind both the user and the user’s employer. If minors are permitted to use the app, then the EULA should require that a parent or guardian consents on the minor’s behalf.

4. Where to put your EULA?

A EULA can reside in one of two places: it can be 'hard-coded' into the app, so that the EULA is downloaded together with the app, or it can reside on a separate web server. The first approach ensures that the EULA is always accessible to the user. However, some users may decide not to download the latest updates, and, as a result, those users may not be bound by those updates.  In contrast, with the second approach, companies can update their EULAs at any time by simply updating the document on their own server, although the EULAs won’t be available to the user offline. Think about which approach works best for your app and the associated risk issues.

5. What about app store terms?

Some app stores require that, if a company adopts a customised EULA, the EULA must include certain terms protecting the app store owner. (Other app stores, such as the Amazon Appstore for Android, place such terms in their own user-facing agreements and require developers to acknowledge that such terms apply.)  Other third-party terms may also apply, depending on any third-party functionalities or open-source code incorporated into your app. For example, if you integrate Google Maps into the app, Google requires you to pass certain terms onto users.  

6. Consumer protection

If your app is targeted at consumers, consider applicable legal requirements. In particular, specific information will need to be provided to consumers, including in terms of your identity, app charges, functionality, interoperability, and geographical restrictions.

Consumers have a right to “return” the app within 14 days, except where they expressly consent to the download and acknowledge that in completing the download they will lose this right. Therefore, it’s very important for your EULA to contain an acknowledgment that the consumer waives this cancellation right on download.

Although most EU member states don’t currently have national consumer protection law specifically concerning sales of digital content, since 1 October 2015, UK consumers have enjoyed new rights and remedies in respect of digital content. Any company targeting an app at UK consumers must take into account implied standards of satisfactory quality, fitness for purpose and compliance with description.  

Also, even where the app is fee, if the app causes damage to a consumer’s device or other digital content then the app provider will be liable for such damage. (Note that the European Commission is currently proposing new EU laws which would give consumers rights of remedy where digital content is faulty or not as described by the seller.)

7. Be clear and fair

A common complaint is that EULAs are too long, filled with impenetrable jargon and hard to read, created more for the court room than to help consumers make an informed choice. In order to ensure your EULA is enforceable, use language that is understandable to consumers. Be particularly careful where technical issues need to be covered. In addition, because space is limited, keep the terms as concise as possible and easy to navigate.

Also note that even if a EULA is written in plain language, extremely one-sided provisions will be at risk of being held to be unfair and unenforceable. And where your app relates to a regulated sector, (e.g. financial services) there are likely to be other regulatory requirements you will need to comply with. As these requirements may go beyond the EULA and affect the way the app is designed and structured, it’s very important to consider compliance issues from the development stage.

Lastly, if you collect personal information through your app, remember that you will also need to have a privacy policy in place.

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